Broker Check

Wealth & Pension Services Group
William Kring, CFP, AIF - Chief Investment Officer

Q2|2018 Portfolio Commentary

Portfolio Review

The quarter brought positive returns for broader U.S. stocks while the Dow and international stocks were down, and bonds were flat.  The broader market returns versus the less diversified Dow can be explained by the performance of technology within the S&P, with most of the S&P’s gains for the year coming from just three stocks; Amazon, Netflix, and Microsoft.

Typically, investors want more breadth during market gains; meaning many stocks are participating. But sometimes you must take what you can get. The quarter did offer solid earnings, as expected, but trading conflicts inconveniently dampened those earnings.  As they say, “it is always something,” and that something is trading for now.

The dollar continued to surprise many by strengthening, confusing the bond markets, and leading to an expectation of lower earnings from our exporters.

Bond returns managed to hold their ground, with the ten-year now looking comfortable below 3%. What happened to projections of 3.5%?  Of course, the flattening yield curve provides plenty of ammunition for recession watchers, but there are many reasons why we can put this worry off for now.

Helpful Asset Allocations for the Quarter

  • Small stocks, growth, dollar hedging

Detracting Asset Allocations for the Quarter

  • International stocks, emerging markets, bonds, large value stocks

Looking Forward

As for last quarter, valuations remain just slightly elevated, and there are no meaningful recession indicators. The questions for the coming weeks will be whether stocks earnings have peaked, or if the current growth rate is enough. This will be weighed against whatever trade conflicts come about.

Europe is still a wild card. The latest cabinet resignations in Britain provide another Brexit issue, and  higher growth rates for the region has yet to gain momentum as expected. Valuations are still attractive versus the U.S. and provided a counterbalance to our tech-heavy market here.

Although we report on a quarterly basis, our views on the global markets and economic trends are longer-term, requiring us to be patient with our investment and allocation decisions.

Our goal is to provide our clients with excellent long-term performance and ongoing peace of mind. We seek to achieve this through strategic asset allocation decisions, cost controls, investment selection, risk management, and tax management. Please refer to your performance report for your account returns and let us know if you have any questions.

Thank you for your continued trust in our firm, and please let us know if you have any questions.

William Kring, CFP®, AIF®
Chief Investment Officer

Important Risk & Disclosure Information